Alabama Grocer Issue 1, 2016

ALABAMA 2016, ISSUE 1

AL ABA M A GROCERS A SSOCIATION

Shopping For

MERGERS AND ACQUISITIONS

For the latest industry news visit www.alabamagrocers.com

PECIA

L

S

INAUGURAL IS

SUE

For the latest industry news visit alabamagrocers.org

IN THIS ISSUE Greer’s Markets Turns 100 Saving The Planet…Quietly Exploring Tomorrow Today

CONTENTS

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F E AT U R ES

COLU M NS

Legislative Session Ends With a Bang, Whimper

President’s Message Your No. 1 Benefit.................................................5

The 2016 legislative session ended with both a bang and a whimper. One needed a program to know which group was filibustering and delaying action at any given time.

Greer’s Markets Turns 100

In 1916, Autry Greer founded what is now a fifth generation supermarket chain operating 34 stores throughout Alabama, Mississippi and Florida. Learn more about Autry’s amazing legacy that is Greer’s Markets.

From The Chair Hot Off The Press!.................................................6 Viewpoint – Kevin Coupe The Shopping Path of Least Resistence..................8 Washington Report Debit Card Swipe Fee Reform A Step in the Right Direction............................................. 16

Mergers and Acquisitions

2015 was a record year for all merger and acquisition activity and 2016 might hit the same heady heights. The reasons are simple and not surprising.

DEPA RT M EN TS Government Relations........................................10

Saving the Planet...Quietly

For years now, there’s been a quiet movement under way on the part of the food industsry to save the planet. And best of all, these sustainability efforts are sustainable.

AGA News..........................................................12 15 Minutes With.................................................36

Exploring Tomorrow Today

A California-based think tank is explroing global economics, generational trends and technological developments to learn more about where and how people willlive, eat and shop in the future.

ALABAMA GROCERS ASSOCIATION President Ellie Smotherman Taylor Legislative Consultant Pat McWhorter

Alabama Grocer is the official publication of the Alabama Grocers Association.

For association members, subscription is included in membership dues. © 2016 Alabama Grocers Association

Editor Jessica Brown E-mail: jbrown@alabamagrocers.org

A L A B A MA G R OC E R

Membership/Event Coordinator Jessica Brown

Alabama Grocers Association 300 Vestavia Parkway, Ste. 3500 Birmingham, Alabama 35216 Tel: (800) 844-2391 Fax: (205) 823-5146 Website: alabamagrocers.org

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Alabama Grocers Association EXECUTIVE COMMITTEE

VICE PRESIDENTS

Chairman of the Board Peter “Greg” Gregerson Gregerson’s Foods

Past Chairman Jack Howell Forster & Howell

Secretary Bo Taylor Coca-Cola Bottling Company United, Inc.

Sergeant-at-Arms James Cochran Buffalo Rock Co./Pepsi

Vice Chairman Frank D’Amico, III BTC Wholesale Distributors

Treasurer Darwin Metcalf Western Markets

David Bullard Piggly Wiggly Alabama Distributing Company

Keith Lusk Golden Flake Snack Foods

Jay Mitchell Mitchell Grocery Corporation

Wade Payne Food Giant

Mike Coggins Sherwood Food Distributors

John Fargason Acosta Sales & Marketing

Eddy Quinley Advantage Solutions

Johnny Collins Barber’s Dairy

Mark Gallivan Alliance Sales & Marketing

Dana Weldon Dutch Farms

Bob Crawford United Johnson Brothers

Robert Gamble Bunzl Distribution

John Wilson Super Foods Supermarkets

Jack Carlile SuperValu

Mike Danes Associated Wholesale Grocers

Curtis Lyons, Jr. Flowers Baking Company

Kirk Clark Mitchell Grocery Corporation

Bill Davis A&R Supermarkets

Mike Fuller Fuller’s Supermarket

R. Kevin Miller Acosta Sales & Marketing

Harold Garrett Gateway Foods

DIRECTORS

Stan Alexander Associated Grocers of the South Naseem Ajlouny Buy-Lo Quality Foods Jeff Brown Country Delite Farms

EX-OFFICIO BOARD MEMBERS

Mike O’Shell Rouses Enterprises

Mac Otts Autry Greer & Sons

James Scott Lighting Specialists

Alabama Grocers Education Foundation

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A L A BA MA G R O C E R

BOARD OF TRUSTEES

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Chairman Jay Mitchell Mitchell Grocery Corporation

Vice Chairman Tom Keller Associated Grocers of the South

President Ellie Smotherman Taylor Alabama Grocers Association

Secretary/Treasurer Phillip Davis A&R Supermarkets

Paul Burnett Byars | Wright

Danny Dunbar Snyder’s-Lance

Kevin Gillespie Acosta Sales & Marketing

Austin Peake Peake & Associates

Ronnie Cook Bimbo Bakeries

Jimmy Freeman Freeman’s Shur Valu

Mike Oakley Alabama Power Company

Chris Crosby Gloden Flake Snack Foods

Larry Garrett Vietti/Southgate Foods

Steve Mulford Royal Foods

Don Richardson Coca-Cola Bottling Company United, Inc. Brian Smith Community Coffee

PRESIDENT’S MESSAGE

Your Number One Benefit EL LI E SM OTHE R M AN TAY LOR President

Your association provides many valuable benefits designed to help your business succeed. But as we learned once again, this time in the City of Birmingham, Advocating on behalf of our industry at both the local and state levels continues to be the No. 1 benefit of AGA membership.

When people ask me the most important role of the Association, my response is always our legislative and regulatory efforts. That was never more true this year in the fight by the Birmingham City Council to increase the minimum wage in Birmingham to $10.10 an hour.

Not only did they vote to take out the provision of increasing the wage by staggered amounts, $8.65 in July 2016 and $10.10 in July 2017, they voted in one day to make the pay increase $10.10 and start immediately upon signage and posting by the mayor.

There was no way our member companies could change payroll records and employee benefits in one day’s time. Makes you wonder if those on the council have ever run a company or signed a payroll check.

In legislative fights like this one, we often ask our members to testify before the legislative committee and I cannot thank those members enough who are willing do so. It is critically important as it was in the minimum wage battle for our legislators to see and understand the ramifications of what local, state and federal legislation can do to affect our businesses.

If you have not already signed up, please consider attending the AGA Annual Convention, July 2427 at the Marriott’s Grand Hotel in Point Clear, Alabama.

We have a sold out exhibit hall, fantastic business session and great networking among industry leaders. Don’t miss the “Day in the Life of a Store Manager” Panel or our regulatory panel discussion on Tuesday. Representatives will be there from the Alabama Department of Agriculture, Alabama Department of Public Health, Alabama WIC and USDA FNS to discuss the top 5 violations in our stores and how to prevent them.

They will also be accessible during exhibit hall time for any individual questions you would like to ask. We will also have a seminar from the Food and Safety Inspection Service, U.S. Department of Agriculture to discuss the new meat grinding and other meat regulations that just went into effect.

As always, I am privileged to serve as your President and thank all of you for the important work you do on behalf of the Association. n

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If you see these two gentlemen or any other legislators that voted in favor of HB174, please communicate our thanks on behalf of your company and our Association. This legislation would have cost our member companies countless dollars and made it impossible to

Thank you to those of you who participated in our grass roots survey. We need to know what connections you have with local, state and federal elected officials. As in the case of Birmingham with minimum wage, these connections were vitally important and we called on many of our members to contact the city council and Mayor Bell with our concerns and opposition. If you did not participate, we will be making individuals calls from the Association office to get this critical information.

A L A B A MA G R OC E R

In the end on the fight of minimum wage (see article), we were able to work with Representative David Faulkner in the House and Senator Jabo Waggoner in the Senate, to prevent local cities from passing not only minimum wage legislation but also minimum leave and other employee benefits related to labor.

transfer employees from one store to another outside of the Birmingham area. A full legislative wrap up is included in this edition of the Alabama Grocer.

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FFRROOMM TTHHEE CCHHAAI R IR

Hot Off The Press!

This month your Alabama Grocers Association proudly unveils its digital magazine – Alabama Grocer.

P ETER G R E GE R SON CGA Chair of the Board, Gregerson Foods

Welcome to the new “Alabama Grocer”!

As this is our very first edition, it is sure to become a collectors item! We are sure you will not only enjoy the publication, but profit from the information it contains.

Our industry and our society as a whole are constantly changing. Our Mission as the Alabama Grocers Association has always been to promote and support the growth and success of the food industry in the state of Alabama through advocacy, education, public relations, and networking.

With that in mind, I am excited to let you know that the Association will begin working with some talented people across the nation to bring you a bi-monthly digital magazine entitled the “Alabama Grocer.”

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A L A BA MA G R O C E R

Our first issue will be released in July and we will celebrate the release at the AGA 2016 Convention. These magazines will be full of

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inspiring articles on hot button grocery topics across the nation. The articles will be both though provoking and informative. In addition, there will be featured articles from both the AGA Chairman and President, as well as any legislative updates and pertinent information going on in our own state and within our Association.

We are confident you will be hard pressed to find a better Grocery related magazine in the southeast.

You will find this magazine to be a valuable asset to you both personally and professionally.

We hope that you will look forward to receiving it every other month. We would also ask that you please consider helping to pay the cost of publication by advertising your organization to our many readers.

Thank you for your support of AGA and our new magazine. We appreciate each and every one of our members.

VIEWPOINT

The Shopping Path of Least Resistance KEV IN C OU PE Founder MorningNewsBeat.com

It isn’t quite the replicator technology fantasized about by “Star Trek,” – with which one could just say, “Early Grey, Hot” to a computer and it would magically appear – but that doesn’t mean it can’t – and won’t – change the world.

The fact is, I think it has the potential to do both.

Earlier this year, we learned that Samsung had unveiled a new refrigerator at the annual Consumer Electronics Show (CES) in Las Vegas.

But this wasn’t just a refrigerator. It was a “smart” refrigerator.

Called the Family Hub Refrigerator, this piece of equipment comes with a 21.5-inch touchscreen on one of its doors, which people can use to shop for products as they run low or out.

Even more impressive, the refrigerator also has cameras inside that keep track of products as they are removed, so it can let people know when supplies are running low. And, people can access all this information from their smart phones, and use them to place orders.

freezers and refrigerators and put pots of hot water inside in order to defrost them. It was a total pain in the neck, but a routine part of life.

(Barbaric, huh?)

Commerce-enabled devices like the Family Hub Refrigerator represent an unprecedented opportunity for our customers because it puts them right where the consumer path to purchase begins: in the kitchen.

Samsung said that it has partnered with MasterCard to provide payment services, and, to start with, MyWebGrocer, FreshDirect and ShopRite for online grocery ordering. Needless to say, these platforms are thrilled.

“Commerce-enabled devices like the Family Hub refrigerator represent an unprecedented opportunity for our customers because it puts them right where the consumer path to purchase begins: in the kitchen,” said Eric Healy, president of MyWebGrocer. And Jodi Kahn, FreshDirect’s Chief Consumer Officer, observed that it created a “frictionless” and “seamless” road between shopper and shop.

Bingo.

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A L A BA MA G R O C E R

iStock

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Wow. I’m old enough to remember when refrigerators didn’t even have automatic defrosting. (Young people reading this will have to trust me on this. We used to have to unplug

Not long after Samsung made its announcement, I got an email from Amazon promoting a new item available on the site – a Brita water pitcher that comes with a filter that enables the consumer to have cleaner, better-tasting water.

Except that this was a pitcher with a curveball – because this Brita pitcher is WiFi enabled.

VVI E I EWWPPOOI N I NTT

It comes, the email said, “equipped with a built-in counter that tracks the amount of water that passes through the pitcher’s filter. The pitcher itself will automatically order a new filter through Amazon Dash Replenishment when the old filter nears its capacity.

This new connected pitcher with Amazon Dash Replenishment gives Brita owners exactly what they want – a new Brita filter on their doorstep at the time they need it.”

Pretty cool.

(I’m tempted here to tell younger readers that I can remember a time when we had to fetch water from the well with a bucket and a rope... but I’m not quite that old.)

The Brita Infinity Pitcher will cost about 45 bucks, which seems to be about a third more expensive than most of the Brita pitchers that I found on Amazon... but the argument is that the tech-driven convenience will make the price difference palatable. And I have to say that I think the argument is pretty compelling. Or, to coin a phrase, it is an argument that holds water.

Innovations along these lines have been much discussed over the years, and it only was a matter of time before dreams and reality met in such a way that products like these could become mainstream.

Without a doubt, we’re pretty much there... products like the Family Hub Refrigerator or Amazon’s ecosystem-centric strategies (which are tied to the

One of the things that one finds a lot at food industry conferences is people who like to cast doubt on the e-revolution.

Interestingly, Ford and Amazon announced at CES that they are working on an initiative “granting Ford owners

And the Amazon ecosystem expands a little more.

What is important to remember here is that once one buys a refrigerator or a water pitcher, it usually will be quite some time before you have to replace them. The refrigerator only has value if it is filled with food that you want to eat... and the pitcher only has value if you have the filters that create cleaner, tastier water. And so it is critical for companies like Samsung and Brita to find ways to be more relevant and useful... which is exactly what they’ve done.

One of the things that traditional retailers have to realize is that the advent of smart appliances and the expanding ecosystems being created by some retailer platforms – especially, but not limited to, Amazon – are combining to create an environment in which it is less and less necessary for people to actually go to the store. These progressive-minded companies are creating paths of least resistance that provide few reasons for consumers to detour elsewhere.

Not everybody, and not all the time. But enough to have an impact on a lot of bottom lines.

One of the things that one finds a lot at food industry conferences is people who like to cast doubt on the e-revolution. They like to talk about the people who still want to go to the store, about the hiccups that can affect click-and-collect or delivery services, about how rural customers have different needs than urban customers, and about how selling points like “your neighborhood grocer” or “hometown proud” or “old-fashioned service” or similar tropes are enough for retailers to hang their hats on when competing in this new environment.

All of this may, in fact, be true. And still not enough to stave off the impact of technology, especially on a generation of shoppers that does not remember those ancient pre-Amazon days.

Not all people, and not all the time. But enough to create leaks in the traditional market shares of a lot of retailers and manufacturers. Leaks that are likely to grow bigger with time.

The future is coming. And it is traveling at Warp Eight. n

A L A B A MA G R OC E R

Echo, Subscribe-and-Save, the Dash replenishment system and even the delivery drones that probably will be flying over our homes one of these days) are putting us right in the middle of what could turn out to be a pretty remarkable time. And retailers have to be prepared to embrace this revolution, which almost certainly will unfold faster than anyone expects.

unprecedented access to their connected-home devices from their cars, and vice versa.”

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GOVERNMEN T R EL AT IO N S

Preemptive Wage Legislation to Pass Alabama Legislature in 2016 ON FEBRUARY 25, 2016, GOVERNOR BENTLEY SIGNED INTO LAW HB174, LEGISLATION THAT PREVENTS LOCAL GOVERNMENTAL ENTITIES FROM REQUIRING MINIMUM LEAVE, WAGES, AND OTHER BENEFITS FOR EMPLOYEES. Representative David Faulkner, along with 52 other bill sponsors, introduced HB174 on February 9, 2016 so that local governments can no longer “increase labor costs within a day or three weeks’ notice”.

This bill was in direct response to Birmingham’s City Council attempting to create a minimum wage to $10.10 an hour.

Birmingham Mayor William Bell signed the bill on February 25 and it was scheduled to be published in the paper on Sunday.

The Governor’s signature on HB174 voids this local ordinance and will save AGA members thousands of dollars’ in additional wages.

The City Council moved up the effective date for an $8.50 local minimum wage from July 1, 2016 to March 1, 2016. The city’s minimum wage would then increase to $10.10 on July 1, 2017.

The Alabama Grocers Association took a leadership role in helping Representative Faulkner to pass HB 174 and worked alongside other major Alabama business organizations to urge lawmakers to pass this legislation.

On February 22, in response to HB174, the City Council approved the $10.10 minimum wage in a vote of 6 -2 with the effective date of Wednesday, February 23, less than 24 hours.

The bill passed the House of Representatives on February 16 with a vote of 71-31 and went for a debate in the Senate, where Senator Jabo Waggoner carried the bill with a 23-11 vote.

Though the effective date was Wednesday, the ordinance still had to be signed by the Mayor and published in the paper before it could go into effect.

This bill establishes the Alabama Uniform Minimum Wage and Right-to-Work Act. It would further specify Alabama’s status as a right-to-work state and prevent local governmental entities from requiring minimum leave, wages, or other benefits for employees, and provide the Legislature with the authority to establish uniform employment policies and regulations of collective bargaining under federal labor laws.

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A L A BA MA G R O C E R

HB174 does not create or set a state minimum wage. Alabama is one of 21 states that use the federal minimum wage of $7.25, as the lowest possible wage employers can pay employees.

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A special thank you to AGA member Buy-Lo Quality Foods and Otis McGuire, Human Resource Manager, who testified before the House Committee on behalf of the grocery industry.

AGA N EWS

Doing More Than Expected

What You Need, Fill Rate–97.5%

When You Need It, On Time Deliveries–97.8%

For the Lowest Cost!

Willing To Compare

Associated Grocers of the South, Inc. For More Detailed Information Please Contact:

Billy Leverett

Vice President Of Sales www.agsouth.com

205-808-4821

3600 Vanderbilt Rd., P.O. Box 11044, Birmingham, AL 35202

AGA N EWS

AGA Hosts 24th Spring Golf Outing The Alabama Grocers Education Foundation hosted its 24th Annual Spring Golf Outing on April 7, 2016, at Inverness Country Club in Birmingham, Alabama.

To date AGEF has awarded over $1 million because of the tremendous support of our members at golf tournaments such as this one.

This tournament included two flights and raised monies for the Alabama Grocers Education Foundation, which funds scholarships to employees and children of employees of Alabama Grocers Association companies.

The next Alabama Grocers Education Foundation fundraiser will be a Silent Auction at the AGA Convention, July 25-27, 2016, at Grand Hotel Marriott Resort in Point Clear, Alabama.

Morning First Place Team

Afternoon First Place Team

Morning Second Place Team

Morning Third Place Team.

Afternoon Second Place Team

The Alabama Grocers Education Foundation Golf Outings would not be as successful without the many companies that sponsored this event and contributed their goods.

PRESENTING SPONSOR Bimbo Bakeries

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SPONSORS

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5 Hour Energy A&R Supermarkets Acosta Sales & Marketing Advantage Solutions/ Palermo’s Alabama Crown Alex Kontos Fruit Co. Argo Insurance Associated Grocers of the South

Associated Wholesale Grocers Gulf Division Associated Wholesale Grocers Nashville Division Barber’s Dairy Bevco Beverages Buffalo Rock/Pepsi Bunzl Distribution/Pactiv Byars | Wright Coca-Cola Bottling Company United Inc. Country Delite Farms Dutch Farms EDLINCO

Flowers Baking Company Freeman Foods Frito-Lay Golden Flake Snack Foods Ice Cream Specialists Imperial Distribution Lighting Specialists Inc Merrill Lynch Mission Foods Mitchell Grocery Corp.

Mrs. Stratton’s Salads Peake & Associates Piggly Wiggly Alabama Distributing Company

Publix Super Markets R.L. Zeigler Red Diamond Snyders-Lance Super-Valu The Hershey Company United-Johnson Brothers of Alabama Wells Enterprises Wright Specialty Insurance

MORNING First Place Team: The Lighting Specialties sponsored team - David Toner, Brian Castillo, Bradley Pate, Tyler Bowen Second Place Team: Jeff Hoping and Brian Lancaster, Birmingham Bud; Chris Ragusa, Whitfield Foods Afternoon Third Place Team

AGA N EWS

Congratulations to this year’s Golf Tournament winners!

Third Place Team: Vernon Price, Steve Melish, Supervalu; David Wright, Ron McClellan, Food Outlet Closest to the Pin: John Gross, Mrs. Stratton’s Salads Longest Drive: Ryan Darnell, Merrill Lynch AFTERNOON First Place Team: The C&M Food Distributing Team Brayden Bell, CD Denson Second Place Team: Naseem Ajlouny, David Bullard, Piggly Wiggly Alabama Distributing Company; Jeff Brown, Country Delite; Sean Wright, GVH Distributing

Steve Shelton, Donald Moore, Dale Smith, Darwin Metcalf, Western Supermarkets

Third Place Team: Harold Shivers, Richard Sprayberry, Alex Kontos; Tim Nicolson, Clark Roper, Piggly Wiggly.

Closest to the Pin: Paul Whitley, Bimbo Bakeries Longest Drive: Brayden Bell, C&M Food Distributing

Great News For Alabama Retailers!

The Alabama Grocers Association now has a Coupon Program administered through American Coupon Services, LLC. Many of our retailers have requested a program through the Association and now we have one for you.

The AGA Program is very competitive in the market.

Coupon Highlights: •

ACS accepts digital, paper and internet coupons.

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ACS is the Coupon Service that several wholesalers use for their private label coupons.

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ACS has an online portal where you can check your shipment information, see when your next check will be mailed and they can notify you if you have any chargebacks.

AGA has been working hard to provide the best in Coupon Servicing and help retailers get the best deal on the market.

If you are interested in getting more information about the AGA Coupon Program, please contact Jessica Brown at jbrown@alabamagrocers.org.

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Other than your AGA Membership Dues, there are no other fees to participate in the ACS Coupon Program. AGA Membership Fees are $200 for your first store and $60 for each additional store. Dues run on a 12 consecutive month basis from the month you sign up.

ACS is a trusted company that has 40 years of customer service experience.

A L A B A MA G R OC E R

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Retailers receive face value plus 4.5-cents per coupon.

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Legislative Session Ends With A Bang, and A Whimper

THE REGULAR LEGISLATIVE SESSION OF 2016 ENDED WITH BOTH A BANG AND A WHIMPER ON MAY 4. ONE NEEDED A PROGRAM TO KNOW WHICH GROUP WAS FILIBUSTERING AND DELAYING ACTION AT ANY GIVEN TIME. IT GOT SO BAD THAT NEAR THE END, HOUSE BLACK CAUCUS MEMBERS WERE HOLDING HANDS AND SINGING “WE SHALL OVERCOME” TO PROTEST THE HOUSE GOP CUTTING OFF DEBATE ON BILLS.

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Always the best news of a session is that both budgets were passed into law, even if the Legislature had to override the Governor’s veto of the General Fund budget which was 1.85 billion, a 5 percent increase over last year.

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The $6.3 billion Education Trust Fund budget passed included a 4 percent cost of living raise for educators making $75,000 or less and all others receiving a 2 percent increase.

The increase budget will also allow for full funding of teachers’ retirement, as well as the hiring of 475 additional teachers and provides for $16 million for

Alabama’s limited, voluntary pre-K program, enough to add 2,800 4 year olds to the program.

The biggest and best news is that we stopped Birmingham and other local governments from increasing the minimum wage within their jurisdiction. That would have created a nightmare patchwork quilt of local laws to comply with.

AGA took a leadership role in helping Rep. David Faulkner of Mountain Brook to pass HB 174, which prohibits local government action. It also establishes law that only the Legislature can enact laws relating to minimum wage and other labor laws in Alabama.

But this session will likely be best remembered for what didn’t get done. Despite pleas from Medicaid officials needing $85 million in additional dollars, the budget only provided an additional $15 million.

But late in the session, the House passed an agreement to give Mobile and Baldwin Counties a lion’s share of the state’s BP settlement money for roads, but it would have placed an additional $70 million in Medicaid for next fiscal year.

The bill was blown up in Senate committee, however, when north Alabama legislators refused to allow $191 million of the settlement go to the two coastal counties, insisting the money be spread across the state for road improvements.

If Medicaid is not fully funded, we risk losing almost $800 million in additional federal dollars to implement a new system of regional care organizations, aimed at trimming the growth of Medicaid’s needs.

The other major issue that failed was the Governor’s prison bill. He proposed an $800 million bond issue to build four new super prisons, closing 13 of the 15 current state prisons. Members had lots of questions about where the prisons would go, how the bonds would be repaid, etc.

The Senate took three separate stabs at coming with a solution, and did finally approved a conference committee report paring the proposal down to $550 million. But it arrived in the House 25 minutes before the session ended, and the Speaker did not feel that was sufficient time to consider so many substantial changes. So it died.

Governor Bentley said last week he would likely call a special session to bring these two issues back, but said everyone “needed a rest” right now.

The House also set up a process for the possible impeachment of Governor Bentley, and Rep. Ed Henry succeeded in gathering the necessary signatures to file a notice of impeachment. The House Judiciary Committee has begun holding its first meetings. Many say the Governor will be loath to call a special for fear that effort may gain steam.

On June 10, Speaker Mike Hubbard was found guilty of 12 of the 23 ethics charges that he wrongly solicited consulting contracts and investments and used his office to benefit his businesses and clients. Each count is punishable with up to 20 years in prison.

With the conviction, Hubbard is automatically removed from office but maintains his innocence and an upcoming appeals process.

On June 10, Speaker Mike Hubbard was found He has served guilty of 12 of the 23 ethics charges that he wrongly District 79 in Lee solicited consulting contracts and investments and County for the used his office to benefit his businesses and clients. last 18 years and was instrumental in the Republican takeover of the Alabama House and Senate.

There is lots of fun in the days ahead as members of the House will be jockeying for position and for the election of a new Speaker.

Victor Gaston, House District 100 in Mobile County is the acting Speaker and will remain so until a new Speaker is elected by a vote of the full House of Representatives at the beginning of the next legislative session.

HB174 does not create or set a state minimum wage.

Alabama is one of 21 states that use the federal minimum wage of $7.25, as the lowest possible wage employers can pay employees.

A L A B A MA G R OC E R

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WASHIN GT O N R EP O RT |

A L A BA MA G R O C E R

Peter J. Larkin President and CEO National Grocers Association

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Debit Card Swipe Fee Reform A Step in the Right Direction CONGRESSMAN NEUGEBAUER (TX-19) RECENTLY INTRODUCED H.R. 5465, A BILL TO REPEAL SWIPE FEE REFORMS, ALSO KNOWN AS THE DURBIN AMENDMENT PROVISION, WHICH PASSED AS PART OF THE DODD-FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT BACK IN 2010.

Repealing the Durbin Amendment, which placed a cap on debit card swipe fees and introduced competition into the debit routing system, would only serve to increase profits for big banks while hurting businesses and consumers.

Lower debit swipe fees have allowed supermarkets to pass along savings to consumers in the form of extended sales and have allowed grocery stores to maintain consistent prices even during shortages that would otherwise result in price spikes.

Consumers have also seen benefits in ways that directly contradict the predictions of the banks.

Despite banks insisting that iStock the Durbin Amendment would be the end of free checking for consumers, free checking has increased from 53% to 61% since Durbin was implemented, according to the American Banking Association’s own numbers.

Economist Robert Shapiro has noted that consumers saved more than $6 billion in the first year after the Durbin Amendment went into effect.

H.R. 5465 would send those savings directly back to the 1.4% of all banks that are held under the Durbin Amendment (only banks with more than $10 billion in assets are covered under the Durbin Amendment).

The Durbin Amendment has worked for consumers and businesses for the last six years and began to introduce competition into a system dominated by two major companies.

We need to ensure more competition within the debit market - not remove it. The Durbin Amendment was a step in the right direction, now is not the time to take two steps back. n

Mark Your Calendar Alabama’s Food Industry Finest 10 a.m.

Wednesday, October 26, 2016 The Club Birmingham, Alabama Event Highlights: • Legislative panel • Keynote speaker: Dr. Kevin Elko • Annual Best Bagging Contest • Retailer, Wholesaler & Vendor of the Year Awards

©2016 BLUE MOON BREWING COMPANY, GOLDEN, CO BELGIAN-STYLE WHEAT ALE BREWED WITH CORIANDER AND ORANGE PEEL

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Find Blue Moon® recipes at bluemoonbrewingcompany.com

100 Years of Service On February 24, 2016, Autry Greer & Sons, Inc. (Greer’s) proudly announced it turned 100 this year!

Founded in 1916 by Autry Greer, the company is 5th generation family owned and operated and committed to serving customers and communities in and around their 34 locations in Alabama, Mississippi and Florida.

OUR STORY In 1916, Autry Greer, founder of Greer’s, opened a grocery store on the Northwest corner of Water and St. Michael Streets, in Mobile, Alabama.

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A L A BA MA G R O C E R

This store was a pioneer in the Cash and Carry food store concept. Self-service soon followed and evolved to today’s modern supermarkets.

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The Greer’s store at Water and St. Michael was the first and, for a long Autry Greer time, the only store in Mobile to advertise prices. These prices were the lowest in town because other stores sold on credit and delivered.

Greer’s has always had a philosophy of offering its customers the highest quality at the lowest prices possible. The public response was great. Success was accomplished only as a result

of the founder’s determination, the confidence of one banker and two suppliers, family, teamwork and sacrifice.

As the sons of Autry Greer became of age, they involved and dedicated themselves to the business.

Autry’s three sons who were active in the business for over sixty (60) years were Autry Vidmer “Jack” Greer, Joseph Barton Greer, Sr., and Elijah Sumner “Bussie” Greer.

The business operated as a partnership until 1958 when it incorporated with the founder Autry Greer, as Chairman of the Board.

In the 1980s some family members (Bussie Greer and Mac Greer) were bought out and is now owned

by Jack V. Greer, Jack V. Greer, Jr., J. Barton Greer, Jr. and Robert A. Greer.

In 2007, Autry Greer & Sons, Inc. became affiliated with Associated Wholesale Grocers (AWG), one of the nation’s largest independent grocery co-ops.

Greer’s currently operates 34 supermarkets located in Alabama, Mississippi and Florida.

In 2014, the Company partnered with Ace Hardware Corporation, a retailerowned hardware wholesaler that began operation in 1924, to bring groceries and hardware together in one place.

Greer’s currently operates two Ace Hardware Express locations - Mobile and Quitman, MS – with its third location to open inside its newest store opening in Bay Minette, AL. Greer’s is proud of the Ace venture as the Company was in the hardware business many years ago and feels combining groceries Continued on p. 20

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Additional Greer family members have joined the family business in the last ten (10) years so the family business can continue to develop leaders for the future: Jan Greer Endfinger (Director of

In 1967, Greer’s constructed a state of the art distribution center with attached corporate headquarters. This distribution center supplied all of its stores for 40 years.

A L A B A MA G R OC E R

The Board of Directors currently consists of: J. Barton (Bartee) Greer, Jr., Chairman; Jack V. Greer, Sr., President; Robert A. Greer, Vice President and Secretary; Jack V. Greer, Jr., Vice President and Treasurer; and O. M. “Mac” Otts, III, Chief Financial Officer.

Human Resources and Marketing); Stephen Thomas (Director of Operations); Lucy Greer Cheriogotis (Corporate Spokesperson, Corporate Chef & Director of Deli/Bakery/Catering); Gray Fobes (Perishable Operations/Meat Department), and Les Buerger (Perishable Operations/Produce Department).

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GREER’S TURNS 100

C O N TI NU E D

and hardware in one convenient location ism ore relevant than ever to customers looking for one stop shopping for their household needs.

THEN AND NOW We feel one of the greatest joys of a family business is for different generations of people to work together and learn from each other. The old teach the young and the young keep the old ones feeling young and energized – all throughout the business.

From the Family: “We are blessed and humbled to have reached our Centennial Year and are excited to share this year of celebration with you. We know that we have reached this milestone with the commitment of thousands of associates, the loyalty of hundreds of thousands of customers and the much-valued support of our many business partners. No matter when you became a part of our Greer’s family, some for many generations, we appreciate you being with us along the way. Thank you for believing in Greer’s and for helping us do so many good things for our associates, customers and the communities we have served for 100

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years!“

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At Greer’s there is no mandatory retirement age. As long as you’re young at heart, you’re good to go!

“Coming full circle to our beginnings in downtown Mobile to our newest store at the corner of Government and Broad, Greer’s has been here for 100 years. Here for Good.

Good for our people. Good for our customers. Good for the communities we serve.” Robert Greer added.

Today, what Greer’s shoppers will find is that Greer’s is Different in many ways from other large chains. It is the best way to save money on the family’s food bill! Greer’s customers will find an expanded selection of FRESH produce and many locally grown items, a variety of grocery items filled with national brands and its Best Choice and Always Save award winning private label brands, many organic products and health foods.

Greer’s shoppers will also find the FINEST of meats cut fresh daily by their skilled market professionals -TOP QUALITY, Black Angus Beef, All Natural Pork and Chicken. Greer’s has always been committed to selling only quality products – that has not changed

Lucy Greer and her Grandfather Jack V.

in 100 years – our customers can always depend on quality!

“The trucks have changed but Greer’s quality, service and commitment to our customers has not! More for Your Money! Simple As That!” says Lucy.

While Greer’s invites all to enjoy celebrating a century in the grocery business with us this year, the current company leaders prefer to focus on the future.

We love the challenge of changing with the times for our customers, and we already see new technologies and our new generation 5 leaders taking us in new exciting directions.

Our Greer’s vision: To bring added joy, well-being and value to people’s lives! Is a service vision that is ageless.

As Jackie Greer likes to say, “We’re not 100 years old, we’re 100 years young!

For additional information, please contact Jan Greer Endfinger, Director of Marketing, at jendfinger@ greers.com.

SPECIAL MEMORIUM Mac’s daughter Vidmer also worked in the business for a while in the late 1970’s and lives in Mobile. Her mother Ann Tiffin also lives in Mobile.

“Our Greer’s vision: To bring added joy, well-being and

value to people’s lives! Is a

service vision that is ageless.”

Purina trademarks are owned by Société des Produits Nestlé S.A. Printed in USA.

“We can tell you every ingredient that went into that bag -- and trace it back to where it came from. Pretty amazing.” eric, logistics Manager & His dog, chewbacca

Makes Beneful. Feeds Beneful.

Go to Beneful.com/our-people to learn more from the people who know it best

F E AT U R E T I T L E

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A L A BA MA G R O C E R

BYLI N E /C ONTINU E D

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There’s still a major need for retailers to achieve economies of scale, especially as they face specialist competition that has a much lower cost base.

MERGERS AND ACQUISITIONS

BY LEN LEW IS

2015 was a record year for all merger

and acquisition activity and 2016

T might hit the same

heady heights

B Y L E N L E WI S

he reasons are simple – economic fundamentals are sound, the need to acquire expertise and distribution is essential; and there are plenty of strong regional chains and independents looking to wed.

“There’s a lot of interest in the grocery sector,” said Brian Todd, president of The Food Institute.

“Private equity firms have a lot of cash on hand and are looking for a profitable investment rather than starting up something new. Some are just looking for a safe haven for cash.

“Meanwhile, some family owned chains, especially third- or fourth generations are looking to cash out,” he adds. “Also, grocery is seen as a lot sexier business than it used to be.”

The executive survey, conducted in partnership with FORTUNE, anticipates an acceleration of M&A

About 12 percent of those surveyed expect the consumer-retail market to be among the most active in M&A activity this year.

The need to get bigger in new markets is not necessarily driving M&A at retail, according to Rampoldt.

“It’s about elevating capabilities,” he says. “When you think about all the things that retailers need to be good at – everything from pricing and promotions to localized assortment – it’s obvious they need to be sharper than they were five years ago.”

Rampoldt says its especially true when it comes to amortizing the cost of those capabilities over a bigger store base.

“The ability to execute better and drive more sales and EBIDTA out of every square foot requires capabilities and, in some cases, technology,” he says.

“It’s a totally different game. Retailers must be more data driven in order to make a rapid response.”

No one is ruling out the possibility of more mega-deals this year since, as Todd put it, “There are always surprises.”

However, with the industry coming off a year of mega-mergers, the total number of stores involved in merger activity this year will be down, according to David W. Schoeder, principal in The Food Partners, a Bethesda, Md.-based investment banking firm, providing merger, acquisition and divestiture and restructuring services to the food industry.

“But over the next 36 months, we’re going to see consolidation driven by two factors,” he says. “First, if you’re operating a conventional store you’re probably in denial. You have to be focused on Continued on p. 24

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His comments underscore KPMG’s 10th annual survey focusing on the outlook for M&A activity across a wide variety of industries this year.

While not focused strictly on retailing, the survey found that 38 percent of executives surveyed will initiate between one and three acquisitions this year.

And the vast majority of deals will be in the U.S. given the relatively strong economic outlook.

A L A B A MA G R OC E R

Joel Rampoldt, retail and consumer lead for KPMG Strategy noted: “There’s still a major need for retailers to achieve economies of scale, especially as they face specialist competition that has a much lower cost base. The ability to spread out things like distribution, marketing and sourcing costs and SG&A across a broader perimeter is imperative.”

activity this year and an increase in the average deal size. The average value per acquisition will be less than $250 million, according to 52 percent of respondents.

23

MERGERS AND ACQUISITIONS

C O N TI NU E D

Continued from p. 23

So you want to sell the business or maybe buy another one but can’t find the right partners?

A former Italian comedy writer and MBA v, Brian Pallas, has come with a unique idea called the Opportunity Network designed to connect nearly 6,000 ceos and owners of family businesses with potential merger and acquisition partners in 75 countries.

Opportunity Network is headquartered in London, but the company now has offices in New York and Barcelona along with reps in cities like Dubai, Paris, San Francisco and is in the process of moving into Asian markets.

The business has been described as something like the Craigslist of mergers and acquisitions. Members can list businesses anonymously and connect with another that they think might be a good fit.

However, there is a minimum deal size of $1 million.

The app enables members to filter the deal by size, location and industry. So, if you’re tired of looking for bargains on golf clubs or restaurants, you can shop around for another company.

operating a conventional store with a twist. Otherwise you won’t be in tune with the new world order and what it takes to be successful today.”

Schoeder says the other factor is an aging group of independents with no succession plan. Many of those will probably exit over the next 36 months and the majority of stores will be sold to other independents.

These are the ones Schoeder called “pac-men” who have grown by gobbling up others.

“These are the super independents,” he says. “They’ve got management teams in place, they’re generating cash flow and have the money to reinvest and buy stores as they become available and make them far more successful.”

Rampoldt also expects to see smaller chains absorbed by larger counterparts if the multiples are attractive to both sides.

“Most grocery retailers are not truly nationwide, so filling in their portfolio is always attractive,” he says.

“This will probably happen more in supermarkets than other classes of retail.”

This is also true for independents who are not only selling out but interested in buying new locations to expand their territory, said Todd.

“Competitive concerns are also driving deals,” Todd says. “Everyone’s selling food – dollar stores, convenience stores, clubs and other alternative formats.

Retailers are looking to protect their market or expand into new ones to increase sales and profits.”

Clearly some geographic areas are more ripe for deals than others, Todd said, noting that the Southeast and, to some degree, the Southwest are still growing. Some secondary markets can be attractive due to their low capital costs, but it’s the major metro areas with built-in demographics that are more appealing.

The economy in and of itself will have little impact on

consolidation, according to Schoeder. What does have an impact is availability of credit, he said, noting that some banks shied away from lending to grocery stores after the Haagen and A&P bankruptcies.

“They’re still very skittish,” Schoeder says. “The ability of a private equity firm to get a deal done at a higher multiple is based on their borrowing more money, not putting more equity into it,” he says.

“You used to be able to borrow four times the cash flow to get a deal done,” he says. “The debit to cash flow ratio is probably off a bit for strategic buyers. But everything depends on the quality and vision of the operators.

You have to have a credible plan and the bite size has to be manageable.”

But scrutiny by lenders could be eclipsed by that of government agencies.

“The Hagen debacle embarrassed the Federal Trade Commission,” Schoeder says. It even slowed down the Ahold/Delhaize merger he said, noting that the FTC is doing an internal investigation to see what went wrong.

Nonetheless, Schoeder believes the agency’s stance is still far more liberal than it was 10 or 15 years ago.

“The focus now is making sure there are credible buyers that can operate the stores to be divested,” he says. “Their mandate is to make sure there is a viable competitor to maintain competition in the marketplace.”

Meanwhile, Rampoldt believes the U.S. supermarket industry is still attractive to overseas buyers.

“I worked a lot in Europe,” he says. “The competitive intensity there is enormous and the ability to grow by opening new units ended decades ago. We’re only just getting to that life stage in the U.S., yet there are still lots of places to grow by opening new stores and increasing square footage.”

Continued on p. 26

“There are plenty of examples of successful retailers being owned by

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A L A BA MA G R O C E R

non-merchants,” he says. “In many cases they try to free the business

24

by shifting investment and assets from things that don’t do anything to things that do and improve the customer proposition.”

The ONLY Federal Credit Union in the United States chartered to serve grocery industry employees and their families www.trugrocer.com

MERGERS AND ACQUISITIONS

C O N TI NU E D

Continued from p. 24

WHAT’S DRIVING ACQUISITIONS IN 2016?

37%

36%

25%

25%

Entry into new businesses

Expand geographic reach

Opportunistic-target becomes available

Opportunistic-target becomes available

37%

34%

Expand customer base

Enhance Intellectual Properties, or acquire new technologies

16%

16%

Acquiring additional supply chain elements

Acquiring additional supply chain elements

Foreign investors might also be attracted to acquiring stores for alternative delivery formats like “click and collect,” according to Rampoldt.

“It’s very big in the UK and France and those who have cracked it in Europe may see a greater opportunity to do it in the U.S.,” he says. “In fact, it may be more attractive than just buying a company for brick and mortar (sales). It’s inherently more complicated, but I wouldn’t be surprised if many companies weren’t thinking about it.”

However, entry as a startup, like the route that German deep discounter Lidl is taking, is certainly feasible.

“They decided not to come in through acquisition but it all depends on the format. It makes sense to grow organically if you’re operating a format that appeals to a specific segment of customers. Where you site those stores is key,” he said, noting that an acquisition would not necessarily provide this flexibility.

When considering acquisitions, a strong cultural fit continues to be essential.

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“If you look at the companies that have been successful you’ll see that they’ve paid a lot of attention to individual cultures when bringing two firms together – with associates, the culture they project to their customers as well as the pace at which they make changes,” he says.

26

“Companies that go slowly tend to do better than those that put their names on the building and open a completely different operation the next day. ” You’ve got to think about the customer experience and protect the one-on-one interaction between customers and associates,” he adds. “It’s important that the quality of that relationship is not jeopardized.”

But the trickiest part of any acquisition may be the decision involving central vs. local control and how much autonomy the regions and stores will actually have.

“It’s critical to get right,” Rampoldt says. “There are examples of both strategies being successful, but you have to be one or the other.”

Asked whether buyers are shying away from turnaround situations, he replied: “Not really. There’s still an appetite for that when the price is right and it’s clear what levers have to be pulled to turn the acquired company around.”

This is especially true for private equity firms who are likely to continue acquiring retail operations.

“They like businesses where they understand what to do to get results,” Rampoldt says. “They’re very good about basic blocking and tackling around inventory management, distribution, store operations and efficiency. Those things are cause and effect in retail and private equity firms have a good idea of what to do, what they have to put into the business and how long it will take before they get out.”

But, he quickly noted that acquisitions are not necessarily a short-term play for private equity firms.

“There are plenty of examples of successful retailers being owned by non-merchants,” he says. “In many cases they try to free the business by shifting investment and assets from things that don’t do anything to things that do and improve the customer proposition.” n

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A L A B A MA G R OC E R

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F E AT U R E T I T L E

BYLI N E /C ONTINU E D

By Cassandra Pye

For years now, there’s been a quiet movement under way on the part of the food industry to save the planet.

These efforts are important to consumers, they shave operating costs in a variety of ways, they align with a complex and intricate supply chain and they’re having a real impact on the industry’s environmental footprint. Best of all, these sustainability efforts are…well, sustainable.

Today, sustainability has become an essential part of every business across the nation.

California consumers lead the nation in the demand for preservation of our planet and its resources; sustainability is no longer an option, it’s an expectation for customers. And, where our customers go, as they say, we follow.

Take Kroger, for example. In the middle of their 49 -acre campus in Compton, Calif., sits the firstin-the-state anaerobic digester. Billions of bugs

cleaning up the environment under the Ralphs and Food4Less banner.

“Our perishable food program donated $4 million of food to our community partners last year,” states Kendra Doyel, Vice President of Public Relations and Government Affairs for Ralphs/Food4Less. “Food which can’t be sold or donated is run through our anaerobic digester which converts food to fuel. This fuel powers about 20 percent of our home offices, our warehouse, the creamery and the transportation center – all located at our Compton facility.”

“The digester has reduced diesel truck trips by 500,0000 miles each year – miles we used to drive to take food to our composting center. It also cleans up about 29,000 gallons of wastewater, every day, from our creamery.”

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It wasn’t so long ago that sustainability for a grocer meant breaking down cardboard for scrap collectors and giving the local Boy Scout troop a spot near the store entrance to collect bottles and cans. Locating a market for recycled wood and metal was almost considered progressive.

28 iStock

S AV I N G T H E P L A N E T … Q U I E T LY

BY CAS S ANDRA PYE

Wastewater from the creamery is mixed in with food waste – including packaging – creating a “milkshake” which is heated and fed to the bugs. Upwards of 150 tons of food waste is processed each day. The result: the equivalent of power for 8,000 homes, annually, is produced to support the facility.

And, clean water – a byproduct of the process – is reused. Doyel says the company is now looking at ways to eventually use particulate matter as compost.

The processor sits in a compact space and, according to Doyel, is both odorless and emits very little noise.

“This is a fairly unique project,” says Doyel. “There are anaerobic digesters all over the world but this one sits in the middle of an urban area, surrounded by businesses, homes and people. We’ve been operating the project successfully for three years.”

Ralphs/Food4Less also engages in traditional sustainable practices, recycling about 7 million pounds of cardboard, plastic and metal, annually.

“And, we’re also helping our customers live a more green lifestyle by offering recycling inside our stores, offering green products – like light bulbs, for example – which help them to save energy,” she says.

For Ralphs, she adds, sustainability means striving to reduce the company’s impact on the environment by using natural resources responsibly while minimizing waste in their operations.

Brian Dowling, Vice President for Public Affairs for Albertsons-Safeway, says the term sustainability, over the last decade, has evolved.

“I would say sustainability wasn’t a term that was tossed around too much,” Dowling said. “But if I look at what companies did 10 years back it was about the environmental footprint – so recycling, collecting cans, cardboard, etc.

Albertsons-Safeway, whose 14 operating divisions include Acme, Shaw’s and Jewel in the east and midwest and Vons on the west coast, has taken environmental stewardship to a whole new level.

“In the seafood space, our goal was to have all of our fresh and frozen label sustainably-sourced by end of 2015,” states Dowling. “Although we did not hit our target for fresh, we were pretty darn close with our frozen – at 99 percent.”

Dowling says that in fresh [seafood], the challenge is there aren’t good alternatives available yet.

“So we’re really working hard with that industry and that objective continues – especially now that we’re a larger company,” he says. “We don’t have a goal yet, but we’re working with FishWise and expect to wrap up by June.”

FishWise is a sustainable seafood consultancy that promotes the health and recovery of ocean ecosystems through environmentally responsible practices.

Dowling says Albertsons-Safeway will establish a goal for all of its banners.

Sustainability efforts are in play on land, as well as sea.

J U S T T H E N U M B E R S: A L B E R T S O N S - S A FE WAY n

Over 22 million pounds of soft plastic (plastic film and grocery bags) recycled.

n

Well over 104,000 tons sent to compost or animal feed.

n

29 million pounds of seafood transferred to responsible sources since 2009.

n

First retailer in the world to offer Fair Trade Certified seafood – sushi grade tuna.

n

Set a goal to source 4.8 million pounds of CSPO (certified sustainable palm oil) in 2016 that is either mass-balance and or segregated for Own Brand items.

n

Set a goal to source only cage-free eggs for store operations by 2025, based on available supply.

“Legacy Safeway stores did recycling, starting in the 1960s,” recalls Dowling.

“In California, we have the opportunity to also backhaul and aggregate materials like cardboard, soft and hard plastic, metal, wood. But, we’re also focusing more on food waste.”

Dowling says Albertsons is taking a tiered approach – expanding its partnerships with food banks to be able to get food that’s at the point where it can’t sell it but can get it to food pantries by sell-by dates.

“We’re always looking for new alternatives; if we can’t send product to a food bank but don’t want to send to a landfill, then we can compost it or send to farmers for animal feed,” he says. “Our objective is to move towards zero-waste.”

Continued on p. 30

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“Sustainability has been at the root of what we do – for a long time,” says Dowling. “Recycling cardboard

Whole different level, indeed. The nation’s secondlargest grocery chain is close to hitting an unprecedented target for seafood.

A L A B A MA G R OC E R

“If you look at where it is today, it’s an opportunity for companies to create value for their organization and do good for the broader community at the same time.”

and plastic didn’t get headlines but our efforts in recent years – on the seafood side and, more recently, on the human trafficking side of the business – are taking things to a whole different level.”

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C O N TI NU E D

Continued from p. 29

The Albertsons-Safeway distribution facility in Tracy, Calif., is one of several which has achieved zero-waste status.

Dowling says his company is now constantly examining every part of their organization – products, community, employees – against what can be done for the planet.

“There’s also been a shift in consumer attitudes and what they expect companies to do in this area,” he asserts. “There are real issues in seafood supply so we want to provide product for our customers but do so in a responsible way.”

The Albertsons-Safeway partnership with FishWise was established in 2009 and the organization, Dowling states, continues to counsel and advise the company on seafood issues. He adds that the organization is showing retailers ways to continue to sell a lot of product but do so in a responsible way – for many years to come.

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“We’re a pennyon-the-sale business,” says Dowling. “That makes us look carefully at opportunities to save on water, energy, shipping costs. All these Ralphs Grocery Company’s anaerobic digester. efforts make good sense for the business; there’s a duality which drives what we do.”

30

For Richard Draeger, Chief Operating Officer, Draeger’s Market, San Mateo, Calif., sustainability is a collection of practices.

“It’s not one thing, it’s pretty much everything,” he suggests. “It includes energy-efficiency initiatives, recycling programs – including containers but also hazardous waste. It has a lot to do with energy

renewables that you employ as part of your overall energy consumption.

“We don’t want to burn energy,” he says. “After labor and labor-related costs, it’s the next highest line item for our company. We’re trying to mitigate cost.”

And, he says, his company is looking at everything because as a small company “we’re looking at decent paybacks – often five years for many of these items,” he states.

“We’ve got R-30 [insulation] on our rooftops and R-19 on our walls,” Draeger says. “We’re looking at photovoltaic energy production for our facilities and at the moment we are looking at “Bloom Boxes”* – cogeneration of energy derived from natural gas – for our operation.”

Draeger says LED lighting – lighting, in general, for that matter – is incredibly important to lower costs and sustainability.

“We’ve changed lighting, literally, throughout our stores,” he says. “There will not be a traditional light anywhere. For our Los Altos store (where they’re rebuilding the store, from the ground up, adding 25 percent more square footage), we’re going to include photovoltaic energy production, we’re also considering Bloom Boxes and anything else that’s sustainable.”

Including food.

“The food we select for sale is sustainable,” says Draeger. “The more we accept from local vendors – especially produce that’s considered much more sustainable as those from distance sources – the better. We’re also using better refrigeration gases; so much has changed – including those more dangerous gases from years ago.”

What do Draeger’s’ customers think?

“Consumer response is always positive,” Draeger insists. “They like to see that you employ sustainable practices. For example, we’ve just started on closing our open merchandised refrigerated fixtures with doors – really nice glass doors on all of our refrigeration fixtures – that’s sustainable.”

Draeger also thinks that when a customer looks at sustainability, they’re really looking at the types of foods a retailer is presenting to them in the produce department – buying locally, and folks who are within

S AV I N G T H E P L A N E T … Q U I E T LY

60 -100 miles of your store. He says consumers notice

that and they’re willing to pay for it.

“We don’t waste a whole lot of food either, to be honest with you,” says Draeger. “Most of it is backhauled. We get rid of a lot of organic waste that way. Not all communities we’re in provide backhaul to the farms. It’s expensive to do that for a small retailer. But, if you’ve got a community providing the service, it’s more cost effective to do it that way.”

Draegers recycles materials often.

“Those things aren’t even on the radar,” says Draeger.

“They’re happening on the natural and have been for a long time.”

The updated Los Altos store will have more natural lights by way of skylights and windows. And, there will be charging stations for electric vehicles (EVs).

“Again, these communities are maturing and these technologies are now available – so we provide the support services to our customers.”

Draeger also poses a challenge to the industry.

“The better we become at messaging [about] what it is that we do, the greater customer appreciation would be,” he insists. “That’s the trick. You do these things as a business and don’t necessarily tout what you do.

It’s important to do that.”

Draeger says they tell their customers about his company’s reusable bag program and some of the energy efficiency programs they carry out with the support of Pacific Gas and Electric Company – including electronic control monitors and variable speed compression motors, all aimed at lowering energy usage – but they can always tell customers more of that story.

involved – and deciding where opportunities for sustainable efforts exist.”

Human trafficking in the seafood supply chain, for example, is complex and difficult to monitor, says Dowling. Specifically, where it’s happening and to whom.

“That’s where the opportunity exists now,” he says.

“There’s so much more collaboration possible that includes the industry, governments, NGOs and others. We need everyone at the table to discuss these issues because they are larger than our companies.”

Doyel, Dowling and Draeger mimicked each other’s remarks on the question of why sustainability.

Doyel: “These efforts are in line with our core values for our customer and our community.”

Dowling: “They are good for the planet and good for our business, too.”

Draeger: “We’re doing good and doing good for the business.”

In all cases, customers win. n Cassandra Pye, is CEO of 3.14 Communications, LLC, a regular contributor to New Jersey Grocer. **The Bloom Energy Server (the Bloom Box) is a solid oxide fuel cell (SOFC) power generator made by Bloom Energy, of Sunnyvale, California, that can use a wide variety of inputs (including liquid or gaseous hydrocarbons[1] produced from biological sources) to generate electricity on the site where it will be used.

Albertsons’ Brian Dowling also sees a future where retailers begin to collaborate more on these efforts.

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“The supply chain is where there is greater opportunity now for companies and others to have an impact,” says Dowling. “We were looking at our own four walls and spent the last few years reducing our footprint through our own initiatives. Now, we’re looking at the supply web – that complex mix of all

A L A B A MA G R OC E R

“Early on,” he says, “the work we did made us independent of other retailers. It’s not going to happen that way anymore.

31

32

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A L A BA MA G R O C E R

By Len Lewis

The eminent British statesman Winston Churchill once said: “It’s always wise to look ahead, but difficult to look further than you can see.”

Difficult as it may be, but that’s exactly what the Institute for The Future, a Palo Alto-based think tank and non-profit research organization, is doing through diverse projects ranging from global economics and generational trends to technological developments – all of which can yield interesting insights into where and how people will live, eat and shop in the decades to come.

“The Food Futures Lab is one of our longest running programs,” said Rebecca Chesney, research manager for the Lab, who also oversees the group’s 10-year forecast program.

“We look at cities, food, water issues and every year, we take a different angle,” she said. “This year one of our goals is to focus on kids and how these digital natives will impact the business model we use and how to communicate with them.”

Other studies have also led IFTF into areas that might be closer to impacting today’s food retailers when it comes to consumers and employees.

Furthermore, the loss of traditional benefits or reduction of the traditional 9–5 workday will start to impact what people eat at lunch, how they socialize and redefine work and school days.

“For example,” she said, “Uber drivers might make most of their money at night. In this kind of fragmented workplace, we have to look at the types of foods they need, where they’re eating them and what they’re shopping for.”

That means mapping food experiences – not only eating food but also packaging branding, accessing food – the entire food experience.

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“Basically, the work landscape is changing and more people are becoming freelancers and moving away from the traditional jobs and locations.

The goal, according to Chesney, is to get people to think beyond next week or the next quarter when shaping their (business) strategies.

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“Our workable futures initiative is looking at the ‘gig’ or on-demand economy and how it’s going to affect things like health insurance and social safety nets,” Chesney said.

A lot of people are trying to figure out what benefit structure they’ll need in the future and how to do things differently.”

Continued on p. 34

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E X P L O R I N G T O M O R R O W T O D AY

BY LEN LE W IS/C ONTIN U E D

Continued from p. 33

“And access to food impacts where we get our food,” she added. “Retailers need to think about that today.“ The Institute is not only tracking the further fragmentation of retail, but the next iteration of retailing, which is likely to be a mixture of on-demand and fully-automated food delivery, the latter of which could be about 10 years away, according to Chesney.

As an example, she cited Amazon’s Subscribe and Save program which offers consumers up to 15 percent savings on recurring delivery of everyday items like toilet paper, paper towels, flour and baby wipes.

On another level, Amazon Dash is partnering with companies like Britta to develop a filter that can track how much water a consumer is filtering using the company’s system.

“It’s tied to your Amazon account and knows how much water you’re using, when you will need filters and automatically orders them for you,” she said.

“It’s a different type of online retail that changes the extent to which consumers are involved in shopping decisions.”

Cheney said itt’s a new purchasing pathway that’s not been fully researched and brings up the question of how much consumers will care about brands in the future and whether they will simply tell Amazon to send them the cheapest item in any given category.

However, customer involvement could increase in a different way.

Consider a San Francisco-based company called Betabrand, a clothing designer with a platform similar to Kickstarter.

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“You post an idea of what you would like then other people can build on it with their ideas to help designers refine the item.” Chesney noted. “Once an item gets enough votes it moves to a crowdfunding stage for prototype designs.”

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If it reaches a certain threshold and the company can guarantee a minimum market, Cheseny says, Betabrand will manufacture the item and apply the amount you donated towards the purchase of the finished item.

“This way the company can reduce space, inventory costs and risk. It’s almost the opposite of automated retail yet another online environment to watch,” she said, noting that many people are already funding food products on Kickstarter.

“Even if people are not purchasing, they are involved in a community,” Chesney said. “We call it engaged shopping. They are not just consumers they are actually participating in the development of a product. Betabrands is a signal of the future. We look for those signals and that’s how we do our forecasts.”

People want to be able to access whatever kind of food they want at any given time. This isn’t just a 24-hour grocery store. The idea of convenience has changed and retailers need to rethink what it really means.

Another field of study for the Institute is automation and automated shopping via “Body Area Networks,” as Chesney called it.

“Think about what’s becoming networked and all the different technologies that are connected,” she said.

“Today it’s a smartphone or Fitbit. But people are working on clothing with sensors to detect hydration levels when you’re working out. There are skin or injectable sensors that could track biometrics and detect illnesses. All these technologies on or in our bodies will be connected to the other technology around us.”

Chesney said people are focused on understanding e-commerce and online retailing, but “the thing to understand now is what information is being tracked about health and nutrition from the different fitness apps that are on the smartphone. The question is how retailers can be involved with that.”

All of these things add up to the next step in data analytics.

“It will be much more nuanced and will offer views into preferences and tastes for different types of consumers,” she said. n Len Lewis is editorial director of Lewis Communications, Inc., a New York-based editorial planning, research and consulting firm. He is a frequent contributor to New Jersey Grocer and several retail publications and trade groups in the U.S. and Europe.

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15 MIN KN UT O WEST HE WITLH… AW

15 MINUTES WITH…

Corby Kummer

B Y L E N L EWI S

Corby Kummer is an acclaimed food journalist, whose books and columns in The Atlantic, Boston magazine and the New Republic have become must-reads for foodies, amateur and professional chefs. Kummer, who isn’t shy about sharing his views on what’s being sold and how, spoke with Alabama Grocer about a few of his favorite issues.

Alabama Grocer: The industry seems to have a love affair with anything tagged local. What do consumers really think?

Kummer: “It’s more important than ever even though consumers don’t really know what it means. Everyone has their own definition of how many miles around the store or restaurant it should come from. Tut they like the idea of helping local economies. It’s the main reason I care about it.”

Is there a mileage number?

“Some people say 40 miles some say 100. It depends on where the settlements are around you. You’re helping keep a place that’s not very far from your home thriving.”

What about environmental issues?

“I’m not entirely convinced buying local is better for the environment. It can use more resources than big farms that offer more economies of scale. And shipping in huge trucks consumes much less energy per unit to get to a store or restaurant.”

Are they asking questions?

“No, they just take their word for it.”

Who’s driving local food trends?

“I think it’s Millennials. It starts with concerns about their own health and that of their families. Then, it’s about how much money they’re spending on food and then it’s about incorporating social ideals.”

What’s considered healthy food? Will the argument over GMOs continue?

“I think the GMO argument will go away regardless of the demographic group. Lower income people are equally concerned with health and fresh products. They may not have access to it and lack time to make it but they are aware and concerned.”

What do you see coming in new food trends?

“A lot of it was what I saw at the recent Fancy Food Show – Paleo diets, higher fat meats. There’s much less fear of fat today so people are returning to meat.

Continued on p. 38

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Is local overrated considering availability of fresh products from around the world these days?

“Undefined but not overrated. But I think that people are asking how companies treat their employees and put a premium on hiring people from the

I get the impression that ‘local’ has just become a marketing and advertising buzzword?

“I think that’s absolutely true. People have to make up their own minds by going to their stores and asking questions. It’s up to consumers to enforce the definition.”

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The whole Chipotle E.coli contamination has put a spotlight on safety of local products.

“That’s complicated. Organic and local doesn’t mean safer. Unfortunately, that’s part of the lesson learned from Chipotle. It generally means it’s better for the people who raise your food. That’s what I think consumers should be focused on.”

community. That’s what it means to me. It’s about making sure people are able to live comfortably in a community that’s supported by community services. It’s about farms, small businesses, or artisan producers creating jobs locally rather than seeing everything move to cities or big packing centers.”

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15 MINUTES WITH…

Continued from p. 37

Gluten-free is still roaring along and I don’t see a reduction. But I saw organic leveling out and not as much product with whole grains as two years ago.”

Natural and organic is price of entry in retailing these days.

Yes. But organic what?

As a food writer do you think consumers are interested in getting back in the kitchen and doing more prep?

“No, I don’t think they are. It’s just wishful thinking on our part. It’s not that this generation doesn’t want to return to home cooking, there’s just a certain fear of it. There’s always the excuse there’s no time, and buzzwords like local are often proxies or excuses for not making food for your family.”

Anything retailers can do to get people back in kitchen?

“I think there should be more chopped, fresh vegetables. Also, cooking classes at supermarkets,

and community centers would help, as well as demos in stores if retailers are willing to make the investment. These ideas have been around a long time. Generally, what gets people to cook again is when they realize they can save money by doing it themselves.”

What do you think about home delivered meal kits?

“I did a recent column on that in the New Republic. I asked why anyone would ‘pay a premium for a large box filled with ice packs and little baggies and tiny shampoo-sized bottles whose contents will produce a few meals and a lot to recycle.’ Clearly, they are competing with supermarkets. I’ve tried a variety of meals from four different companies and what they had in common was a lot of packaging. It has its advantages, but I wouldn’t buy another meal kit.” n

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Good for grocers.

Good for the environment.

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